Is Kodak Circling the Drain Once More?

Despite a surge in the popularity of film, the 133-year old Eastman Kodak has warned investors that it's in danger of being unable to service its debts. Will it finally run out of road?

According to CNN, in an earnings report at the start of the week, Eastman Kodak said it doesn’t have “committed financing or available liquidity” to pay its what are roughly $500 million in upcoming debt obligations.

Half a billion is a lot of money to find. “These conditions raise substantial doubt about the company’s ability to continue as a going concern,” Kodak said in a filing.

Unlike a lot of the rest of the industry, the company says that it's not tariffs directly that are causing it issues, as it makes a lot of its products in the US. But the wider economic slump that is the inevitable knock on effect of the higher prices the tariffs are causing is undoubtedly catching it off balance.

It does have a cunning plan to stop itself disappearing down the drain, but as that involves ceasing payments into its retirement pension plan, there is a certain amount of nervousness about the company's  long-term future. Shares slumped 25% on the news, and though they rallied a bit during the course of Tuesday, they're still 20% down on what they were on Monday. 

Kodak is bullish, saying that it is “confident it will be able to pay off a significant portion of its term loan well before it becomes due, and amend, extend or refinance our remaining debt and/or preferred stock obligations.” And it tells PetaPixel that the pension move is going to bring it $300m, which will go a long way to settle its obligations. However, it admits that the move is not solely within Kodak’s control to execute, and therefore is not deemed ‘probable’ under U.S. GAAP accounting rules.

We have, of course, been here before in more ways than one. Kodak filed for Chapter 11 bankruptcy protection in 2012, which it only exited a year and a half later after (among other things) agreeing to sell part of its business to its UK pension fund which was suing it for $2.8bn.